STATE BUDGET STALEMATE | DAY THREE

County sales taxes enter debate

Jan Murphy

Although Gov. Ed Rendell's proposed personal income tax increase appears to be stalled for the moment, a separate tax increase plan is gaining attention in the state House.

A proposal that could become part of the state budget debate would give counties the option of imposing 1 percent sales taxes on top of the state’s 6 percent sales tax to help reduce county and municipal property taxes.

Rep. Michael Sturla, D-Lancaster, told the House Local Government Committee on Thursday that his bill would give 50 percent of the revenue raised by the tax to counties, 40 percent to municipalities and 10 percent to efforts of multiple municipalities, such as police protection.

Counties and municipalities would have to use at least 60 percent of their shares to lower property taxes.

“Shifting some of the property tax burden to the sales tax is more fair than the current property tax that counties and municipalities have to levy because it affects a broader segment of the population, including visitors, tourists and commuters,” Sturla said.

The measure appears to be gaining traction in the Democrat-controlled House, but it remains on the back burner in the Republican-controlled Senate.

Two counties, Allegheny and Philadelphia, already have 1 percent local sales taxes. Sturla’s bill would allow Philadelphia to increase its tax to 2 percent, but Allegheny would have to remain at its current rate.

Doug Hill, executive director of the County Commissioners Association of Pennsylvania, said he is unsure how many counties would impose the tax.

At least one midstate county commissioner said he would prefer a variety of tax choices that could be adapted to fit local economies.

“I’m just very suspicious of the proposals that have been put forth,” said Gary Eichelberger, chairman of the Cumberland County commissioners. “If it’s just a shifting of responsibility for taxation, we’re not interested in that.”

In addition to concerns about adding taxes during the economic downturn, some lawmakers worried about the impact on shopping.

Allegheny County has had its local tax for 15 years, and it has not altered shoppers’ behavior, Hill said.

But Senate Majority Leader Dominic Pileggi, RDelaware County, said shoppers in his district travel to Delaware because that state doesn’t charge sales tax.

“People would have a further incentive to simply go across the border,” Pileggi said.